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Microsoft Corp today announced that it would buy artificial intelligence and speech technology company Nuance Communications Inc. in an all-cash deal valued at $19.7 billion including net debt, as the company looks to strengthen its cloud strategy for healthcare.

Microsoft is offering to purchase Nuance at $56 a share, a 23% premium to Friday’s close, according to a statement from the company.

“Nuance provides the AI layer at the healthcare point of delivery… AI is technology’s most important priority, and healthcare is its most urgent application,” Microsoft CEO Satya Nadella was quoted in the statement.

Both the companies had earlier formed partnership in 2019 to automate clinical administrative work such as documentation; and this acquisition comes at a time when there is a boom in telehealth services as medical consultations shifted online due to Covid-19 pandemic.

Microsoft has been working with Nuance for two years on AI software that helps clinicians capture patient discussions and integrate them into electronic health records, and combining the speech technology company’s products into its Teams chat app for telehealth appointments.

The deal also follows Microsoft’s recent acquisition of gaming company ZeniMax Media, and reports of buyout interests in messaging platform Discord, which also allows live audio events

A deal for Nuance would be Microsoft’s second-biggest, after its $26.2 billion acquisition of LinkedIn in 2016.

The transaction is expected to close this year.

Mark Benjamin will remain the chief executive officer of Nuance and will report to Scott Guthrie, executive vice president of Cloud & AI at Microsoft, the company said.

“Over the past three years, Nuance has streamlined its portfolio to focus on the healthcare and enterprise AI segments, where there has been accelerated demand for advanced conversational AI and ambient solutions,” Nuance CEO Mark Benjamin was quoted.

He added “To seize this opportunity, we need the right platform to bring focus and global scale to our customers and partners… this combination offers a critical opportunity to deliver meaningful and certain value to our shareholders who have driven and supported us on this journey.”

Nuance helped launch Apple Inc’s assistant Siri and also makes software for businesses ranging from healthcare to then automotive industries.

 

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